States Break Out Gift Cards for the Holidays

Not content to let private businesses corner the market on gift cards — the nation's most popular holiday present — Kentucky , Ohio and West Virginia are marketing gift cards of their own as the holiday season approaches.

Just before Thanksgiving, Kentucky Gov. Ernie Fletcher (R) publicized a move to make his state more competitive. It involved offering additional sites to purchase cards and an expanded menu of products to purchase.

Kentucky , along with Ohio and West Virginia , sells electronic, stored-value plastic gift cards through its state parks system, redeemable for gift shop merchandise like T-shirts or for park services like canoe rentals. The cards can be purchased in person, online or over the phone. Kentucky's "Unbridled Spirit" cards now also will be accepted at three popular tourist sites — the Kentucky Horse Park, a sprawling ranch and museum devoted to all things equine; the Kentucky Artisan Center, a retail clearinghouse for handmade arts and crafts; and the gift shop of the Kentucky Historical Society , a state museum.

With more than 1 million annual visitors to the horse park and more than 600,000 to the artisan center, potential gift card sales are an "untapped resource," said Chris Gilligan, spokesman for the Kentucky Commerce Cabinet.

Since October of this year, Kentucky has made $92,000 in gift card sales, Gilligan said. Last year, when the cards could be used only in state parks, total revenue was $113,000. The state's contractor for the system, Louisville-based Comdata Stored Value Solutions, makes about three cents on every card sale. A sale is counted not when someone buys a card, but when that card is brought back and redeemed.

Since 2000, stored-value gift cards have exploded in popularity as a holiday gift. U.S. consumers are expected to spend $24.8 billion on gift cards during the 2006 holiday season, an increase of $6 billion compared to the same time in 2005, according to the National Retail Federation.

Ohio, which has a gift card valid at 174 state park locations, earned $124,000 from its cards last year, said John Hunter, special project manager for the Ohio State Parks. Hunter said state officials will consider whether to expand the program to mimic Kentucky 's in 18 months when they review Ohio's existing contract with Maryland-based vendor InfoSpherix, Inc.

West Virginia 's card is redeemable at 49 state park locations, and total revenues for 2005 were about $66,000, said Ken Caplinger, acting chief of West Virginia State Parks. The state inaugurated its program last year, and the cards sold briskly during the holiday season, Caplinger said. He wasn't sure whether the state would try to increase the gift card program going forward. But in Kentucky , state officials already see even more cards in their future.

Beyond tourism, Gilligan said the state may consider introducing gift cards for ordinary citizen-government transactions such as paying taxes or parking tickets.

Bob Skiba, executive vice president of Comdata Stored Value Solutions, Kentucky 's card-system vendor, said this scenario remains in the distant future because of the time it would take to design, install and administer a system that would work with disparate state agencies.

The technology exists for the wide-open government use of stored-value cards, he explained. "In theory it's unlimited, but the progress has been slow," Skiba said.

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